One of the largest crypto mining companies in the U.S., Core Scientific, has joined the list of bankrupt companies following the FTX saga. The company on Tuesday filed for Chapter 11 bankruptcy protection in Texas. The file was disclosed by an insider in the company’s finance department.
Core Scientific is a bitcoin mining firm with sophisticated computers designed for validating cryptographic transactions, creating new tokens, and as well as powering data centers. Analysis shows that Core’s market capitalization has gone down a huge percentage from its July 2021 capitalization.
The company has been on equipment lease and despite generating cash flow, won’t be able to pay back its debt due to insufficient funds. However, the insider mentioned that the company will not liquidate, will continue to operate, and will reach a negotiation with noteholders who hold the bulk of the debt.
In October, Core said that holders of its common stock are likely to experience a loss of their assets if the industry does not recover. After giving out the deal structure, they mentioned that payments would come in late Oct. and early Nov. creditors are, however, free to sue the company for nonpayment, Core said.
The Austin, a Texas-based miner, which has operations in North Dakota, North Carolina, Georgia, and Kentucky, said in its October filing that “operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs,” as well as “the increase in the global bitcoin network hash rate” — a term used to describe the computing power of all miners in the bitcoin network.
Core has been strained by other cases alike, especially from its affected customers. Celsius, a Core Scientific customer, in July filed bankruptcy protection which affected Core’s balance sheet.
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